THE CHALLENGES OF ADOPTING SAGE PASTEL ACCOUNTING SYSTEMA CASE Free Essay Example

THE CHALLENGES OF ADOPTING SAGE PASTEL ACCOUNTING SYSTEM

A CASE OF HIGHER AND TERTIARY INSTITUTIONS IN MASVINGO.

CHAPTER ONE

INTRODUCTION

1.1 Background to the study

Accounting has long been an organisational function especially with the advent of directors who need to update what is happening in the organisation to the shareholders. Maintaining, preparation and presentation of accounts becomes important for business success and for effective decision making in both non-profit making organisations and profit making organisations because they have to report to the stakeholders of the organisation through financial reports.

However, there was improper or inefficiency financial reporting due to loss of records, delay in preparation of records and its associated problems. This study focused on establishing the influence of Sage Pastel accounting system on financial reporting.

The revolution in the information system which started in the early 1950s when the first business computer become available is still in progress (Nash 2009). With the expansion of business, the number of transactions increased and the manual method of keeping and maintaining records was found not to be manageable.

With the Introduction of computers in business the manual method of financial accounting and management is being gradually replaced with computerised ones. The rapid change in information technology, the wide spread of user friendly systems and the great desire of organisations to acquire and implement up to date computerised systems and software have made computers much easier to be used and enabled accounting tasks to be accomplished much faster and accurate than hitherto.

Accounting is an essential part of any business, large or small, profit making or non-profit making.

Many small enterprises do their accounting manually and others are now considering using computerised accounting packages because despite both systems producing required reports according to accounting principles and concepts, the later produces a more accurate report. Computerised accounting systems are expensive but its advantages is on speed and the ability to store information.

The evolution of computer technology has completely transformed the accounting systems and studies have shown that finance outcome of an organisation will always depend on how much one invests and improves the accounting system being used. (Imeokparia 2013). In the area of accounting and finance the use of manual financial systems has been replaced by the use of the computer software to enable quick reporting and easy processing and storage of financial information. This has made facilitation of accounting software’s, preparation and access of financial statements and use of accounting procedures easy.

In the current business, challenges in using computer software mostly results to financial information not being accurate, delays in financial reporting, and that financial information may not be stored for a long time and or accessed when needed. Accounting software is a class of computer programs that perform accounting operations. It is an application software that records and process accounting transactions within functional modules such as accounts payables, accounts receivable, payroll and trial balance.

Thus these software packages allow the whole accounting system to be run on a computer hence the name computerised accounting (Daniea Bricklin.2014). Every business has numerous process, some simple, others complex and cumbersome, but as the business grows, companies acquires new customers, enters new workers and keeps pace with constant changes in information technology, and companies need to maintain highly accurate and up to date accounting, inventory and statutory records. This is where the computerised accounting systems helps simplify, integrate and streamline all the business process, cost-effective easily and helps to present the time picture of all the business undertakings to users of financial reports.

The history of computerised accounting systems was also implemented in in 1953 when Arthur Anderson was asked by General Electric to implement an automated payroll processing system at their site in Kentucky. The system was comprised of a universal automatic computer. The universal automatic computer stored data on magnetic tape rather than punch- card. In 1955 the universal automatic computer began running payroll for one of general electric’s factories. It marked the first time a company had bought a computer purely for accounting. It took 40 hours to complete the payroll calculations.

A few decades later, technological advances cause computers to be relatively cheap and there was a rapid evolution from paper based trial balances to spreadsheets. Still the balance of books was done manually, but later the first accounting packages appeared on the market. In South Africa Turbo-cash was launched in 1987 with an automated system for trial balance, balance sheet and Income statement. A 15 day, process of consolidating ledgers was reduced to minutes. But there were many functions this program could not do such as calculative tax or invoicing clients. Turbo-cash could not think for itself and it was not yet web-based.

In 1990, Turbo-Cash began being distributed by Sage Pastel. Though it became known by the later name, it was effectively the same system. This product evolved to become ubiquitous in South Africa and has 80% of the local accounting software market. Sage Pastel has upgraded continuously and added in functions for customer invoicing, supplier management and inventory. Sage Pastel by that time was now developed to a Sage Pastel partner version 1.5.3. Although Sage Pastel Partner was commonly used in those days it has problems of only focusing on bookkeeping and forgetting accounting standards. In year 2000 a software called Sage Pastel was developed again in South Africa to replace partner.

This Sage Pastel version was and is still good in accounting and reporting because it uses accounting standards. The two accounting packages Sage Pastel partner and Sage Pastel are both used but partner is only good in small enterprises. The use of Sage Pastel accounting sprung widely from South Africa to many other countries. Today there is Sage Pastel Africa, Sage Pastel America, Sage Pastel UK, Sage Pastel Australia and many other places

Sage Pastelis an accounting software (package) that is used to process accounting transactions. This software has a payroll add on module which is used to process salaries. Sage Pastel accounting provides the user with the features such as the journals, cash book, bank reconciliation, match open item, time and billing and receipts. Sage Pastel accounting software has a double entry method that take away errors giving accurate financial reports. An easy management of customers’ and suppliers invoice, as well as returns and payments is made possible (Sage Pastel Software in Zimbabwe, 2013).

The software helps with management of stock movements and preparation of invoices and statements easily and quickly (Chinembiri, 2013). It eliminates the tasks of compelling newer versions of financial records with every small revision. Sage Pastel accounting is the application that is ranked one of the highest favourable software with users globally. Sage Pastel work hand in hand with spreadsheets in the fields of accountants, engineers and many other professions and this is the reason why the reports from Sage Pastel accounting software automatically convert into spreadsheets reports. This automatically means that a user can import and export figures using spreadsheets when using Sage Pastel.

In Zimbabwe, Chinembiri (2013) say that Sage Pastel based accounting programme enables an access on firms to do business accounts online from anywhere in the world as it was designed for any business. Sage Pastel now compute businesses financial information and store it in Sage Pastel servers making the information accessible from any place that has internet connection. Anyone with the access to this software can view the same information anywhere hence making Sage Pastel software an effective tool Thuraiappah (2014). Okwuduche (2014) Dependency on hard disks is reduced as data within the system remain secure. Financial information cannot be stolen as all access is logged hence giving information on who tried to access what.

Thuraiappah (2014) provides that data is converted into actionable information useful for decision making in using Sage Pastel accounting software. Okwuduche (2014) wrote Sage Pastel accounting serves the need of timely decision making for managers since the world of today is all about speed. Information can be processed anywhere quickly by a manager provided there is the right device and internet connection. Sage Pastel accounting improves the overall efficiency of a company if all the benefits of using this software are taken, for example fast decision making combined with the reduced overhead will increase the productivity and efficiency of a company. Sage Pastel software in Zimbabwe (2013) states that the range of Sage Pastel’s accounting software ensures sustainability and support of continued growth from small to medium to large enterprises.

An upgrade to a Sage Pastel product range is best suited for small and large business owners and managers as there is security in the knowhow that as a business operations grow and change Sage Pastel will always support any kind of operation whether small, medium or large. Sage Pastel is the SME market leader in SADC and its software products have user coverage of more than 180 000 companies in Africa, Europe, the UK, Australia and Asia (Sage Pastel software in Zimbabwe ;2013) on www.chips.co.zw. A provision of flexibility and rich accounting software is done by the Sage Pastel product range. Intowely (2010) reflects that with Sage Pastel one can analyse trends, produce accounts as well as generate and print complete financial statements with notes which can then save time on financial reporting and tax purposes.

Roomes (2011) if an organisation offering debit orders as a method of payment to clients has the ability to produce recurring invoicing and set up debit order collection batches directly from the accounting software. Supplier or creditor payments as well as expenditures such as salaries can be released from the accounting application with ease (Sage Pastel Software in Zimbabwe, 2013). Also, automatic downloads of bank statements which have been internally mapped to reconcile and post the transactions to one’s business cash book and ledger accounts; this integration saves time while eliminating data capture errors during reconciliation (Intowely, 2010).

Like many other African countries Zimbabwe is also one of the countries though the ground to use Sage Pastel is well prepared, it is adopting the system at a slower rate. The awareness to use Sage Pastel started in 1990s. Those days many sectors in Zimbabwe were dominated by manual systems and SAP. Sage Pastel accounting was not fully adopted, except a few private companies and non- governmental organisations and government was totally using SAP. According to the report by Auditor General it was known that most of the government ministries were struggling in using Sage Pastel accounting software as compared to SAP and manual system (Chiri 2011).

Though most government ministries are trying to acquire infrastructure in order to migrate from manual financial reporting and accounting records, reports from a comparative survey indicate that ministries are not willing to incorporate Sage Pastel accounting system (Auditor General Report 2014). (Ministry of finance, 2014) Governments departments are giving excuses on their failure to fully adopt and use Sage Pastel accounting package.

As the problem of producing unreliable inconsistence, untimeliness, and inaccurate reports continues, Higher and tertiary education finance director issued a statement to all Higher and tertiary institutions to totally adopt with immediate effect Sage Pastel Accounting system (Herald June, 2017). This was because many institutions including teachers colleges, polytechnics universities industrial tertiary training and development centres and vocational training centres are not enjoying the benefit of Sage Pastel accounting package thereby leaving a gap to the topic in question.

1.2 Statements of the Problem

Higher and Tertiary Institutions in Masvingo have not effectively adopted the use of Sage Pastel Accounting despite the effort by the Sage Pastel distributors in Zimbabwe to market the software and the benefits enjoyed when using the system. The institutions are failing to produce system generated reports. It’s not clear the kind of constraints that are affecting the adoption of Sage Pastel accounting system among the higher and tertiary institutions. This study assesses the constraints affecting adoption of Sage Pastel accounting in higher and tertiary education Zimbabwe.

1.3 Research objectives.

? To establish how poor consultancy affects the adoption of Sage Pastel accounting in higher and tertiary education.

? To analyse how lack training affects the adoption of Sage Pastel accounting in higher tertiary education.

? To establish how technology gap affects adoption of Sage Pastel accounting in higher and tertiary education.

? To determine how user perception affects the adoption of Sage Pastel accounting in higher and tertiary education.

1.4 Research questions

? What is the effect of poor consultancy in the adoption of Sage Pastel accounting?

? How did lack of training affects the adoptability of Sage Pastel accounting?

? How did technology gap affects adoption of Sage Pastel accounting?

? How user perception did affects adoption of Sage Pastel accounting?

1.5 Significant of the study

This study is very helpful in the sense that it will enable the management to understand the fast changes in technology and how it affects financial reporting. The management will also realise the effects of using unqualified consultants in the process of adopting Sage Pastel accounting. The management will come out with ways to overcome negative user perception. To the government this study is helpful in the sense that it will facilitate a proper decision making guide. To the public this study will help the public to know the position of the public funds and how they are managed

1.6 Assumptions of the study

The researcher based the study on the following assumptions

? All participants in questionnaires understand the meaning of the Sage Pastel financial reporting and comprehend in the English language.

? Higher and tertiary institutions are not conforming to the acceptable financial reporting standards

? The samples to be used by the researcher are a true representation of the whole population

? The suggested solutions will promote an increase and fast adoption of Sage Pastel accounting.

1.7 Delimitation

The study will involve the executive management and employees of finance and admin of Higher and Tertiary Education in Masvingo province. This will include GZU, Masvingo poly, Masvingo Teachers, Morgenster Teachers, Bondolfi Trs, RCU and ITTD. The researcher is continued to the period from January 2019 – December 2019. Other aspects outside this boundary have been ignored in the interest of time and resources.

1.8 Limitations of the study

Some of the information being needed, respondents might view it as confidential and may withhold it or give biased information, responses depend on current mood and motivation, financial constraints hinder travelling and stationery. To overcome these challenges, the researcher mainly uses questionnaires.

1.9 Definition of terms

Accounting is the recording of business transactions in the books of accounts of a firm, the preparation of financial reports and the interpretation of those reports.

Computer is a programmable machine

Software is a set of instructions, data or programs used to operate computers and execute specific tasks.

Manual accounting is a way of keeping business financial records with a written ledger of transactions

Sage Pastel Accounting is an accounting software that process the financial transactions and events as per Generally Accepted Accounting Principles (GAAP) produce reports as per user requirements.

Transaction is the voluntary exchange of goods or services for money or an equivalent goods or services

Ledgers is collection of an entire group of similar accounts in double-entry bookkeeping.

1.10 Summary

This chapter has given an introductory insight of Sage Pastel accounting history and problems being investigate thereby giving a clear picture to the researcher problem. It includes statement of the problem, Research objectives, research questions significance of the study, assumptions of the study, delimitations, limitations, and definition of terms. This chapter subsequent other chapters.